Spending on real estate construction projects in the United States rose in December, ending a year in which construction activity increased for the first time in six years.

Construction spending rose to a seasonally adjusted annual rate of $885 billion in December, the Commerce Department said Friday. That was up 0.9 percent from November, when spending increased a revised 0.1 percent.

For all of 2012, construction project spending totaled $850.2 billion, a gain of 9.2 percent from 2011, when construction spending had fallen 3.3 percent. Even with the increase, construction activity is 27.2 percent below the all-time high of $1.17 trillion set in 2006 at the peak of the housing boom.

Construction has been posting a slow recovery, led by gains in the home buying market.

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In December, housing and nonresidential construction posted gains but spending on government projects fell.

The construction gains are helping boost the overall economy which has added nearly 100,000 jobs over the past four months.

In December, spending on residential projects rose 2.2 percent compared to November, the ninth straight monthly gain. Spending on nonresidential projects rose 1.8 percent in December after a 0.3 percent drop in November.

Spending on government projects fell 1.4 percent to $270.1 billion, the lowest level since November 2006. Government activity has been constrained by tight budgets. In December, spending on state and local government projects fell 1.7 percent while spending on federal projects was down 1.3 percent.

C.A.R’s Pending Home Sales Index for December

Seasonal factors, combined with low housing inventory, particularly a lack of real estate-owned homes (REOs), drove California pending home sales lower in December, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today. However, the share of distressed properties increased in December, as lenders pushed to close short sales and move them off their balance sheets.

Pending home sales data

C.A.R.’s Pending Home Sales Index (PHSI)* fell 20.5 percent from a revised 103.5 in November to 82.3 in December, based on signed contracts. Pending sales were down 6.5 percent from the 88.1 index recorded in December 2011. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

Distressed housing market data

The share of equity sales – or non-distressed property sales – compared with total sales decreased for the first time in 11 months. The share of equity sales in December decreased to 63.6 percent, down from 64.9 percent in November. Equity sales were still higher than December 2011’s share of 48.4 percent.

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After falling steadily for the past several months, the combined share of all distressed property sales rose to 36.4 percent in December, up from 35.1 percent in November but down from 51.6 percent in December 2011.
Of the distressed properties, the share of short sales was 25 percent in December, up from 23.4 percent in November and from 24 percent a year ago.

The share of REO sales dipped to 11 percent in December from 11.3 percent in November and was down from 27.2 percent in December 2011.
The available supply of REOs dipped in December, with the Unsold Inventory Index for REOs declining from 2.1 months in November to 1.9 months in December. The December Unsold Inventory Index was 2.7 months for equity sales and 2.4 months for short sales.

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This is filed under National Markets.


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